September 7, 2007
Australian wheat to seen exceed 2006 crop
Production from the Australian wheat crop to be harvested this October to December this year is seen to exceed the drought-reduced 2006 crop, but the supply won't be sufficient to ease upward pressure on world prices already at or near record highs, industry players said Thursday (September 6).
Drought has seen some crops turned over to livestock, but fields in many districts remain in good condition, according to Murray Jones, president of national grower lobby Grains Council of Australia.
In the face of a severe drought, wheat production in Australia plunged more than 60 percent to 9.8 million tonnes in the last crop year ended March 31.
Growers' hopes were raised in April and May after early planting rains fell across eastern Australia, spurring widespread planting of winter crops, but Jones said many areas haven't received good rains since June.
Brett Donoghue, trading manager at ECOM Group's Australian unit, said even with the most favourable weather, there is no chance that production will reach the 23 million tonnes forecast by the US Department of Agriculture. At best, production will just reach 20 million tonnes or lower.
Many eastern areas of the grain belt running through Queensland, New South Wales and Victoria still look good, though crop conditions are starting to turn for the worse with rain needed in the next two weeks to prevent a further deterioration, he said.
However, many of the potentially big crops in western areas of the eastern states have already "gone," with some being turned over to livestock or baled for hay, Donoghue said.
New South Wales will be lucky to get an average crop, which in recent years has been 6.6 million tonnes, and production in the state is more likely to come in around 4 million tonnes, he said.
Crops need 25 to 50 millimetres of rain in the coming weeks or they die as they have no subsoil moisture to draw on, particularly after unexpected hot weather in late August, according to Donoghue.
Concerns about a small Australian crop have helped fuel record prices for wheat in the US, Europe and Australia, and Donoghue believes prices could rise further.
US wheat futures Wednesday ended limit up in contracts on all three exchanges for the second consecutive day, after setting fresh record highs on fears about supply shortages and strong demand, traders said.
Chicago Board of Trade September wheat closed up 35 1/2 cents at US$8.42 1/2 per bushel after setting a new all-time high of US$8.55.
Donoghue said the figures indicate that world supply is getting "tighter and tighter".
